Who the true trademark owner is, as between a member of an LLC (or shareholder of a close corporation) and the entity that the person owns, can be a vexing question. When there are only one or two owners of an entity the lines are very blurry—see here and here and here and here and here for examples.

And now we have another example. Opposer Dina DiCenso and Applicant Dave Wallin started a tattoo business. Wallin is a tattooer and DiCenso had been one of his clients. DiCenso contributed the start-up capital as a loan, found a rental property and signed the lease, personally guaranteeing it. She proposed some names and Wallin chose “Eight of Swords” and designed the logo:

Eight of Swords, LLC (a co-opposer) was organized in New York on May 20, 2009. DiCenso prepared the Articles of Organization, Wallin signed them as “Member,” Wallin was the registered agent, DiCenso paid the filing fee personally, and DiCenso filed them. DiCenso later prepared and signed the Certificate of Publication listing herself as Managing Member. DiCenso also registered and personally paid for domain name registrations.

Things fell apart, as they do. In 2010 DiCenso petitioned a New York court to dissolve the LLC, which Wallin opposed. On January 13, 2011, the court denied DiCenso’s petition and ruled that DiCenso’s interest in the LLC “is minimal, and … is certainly less than 20%, and may be as little a 1% to 5%.” The court also ruled that DiCenso “does not have authority to go to the business and run it or manage it in any way at all.” However, DiCenso was entitled to a share of revenue from the business.

Thereafter, on July 18, 2011, Wallin filed the application for the Eight of Swords logo in his name personally, not in the name of the LLC. DiCenso opposed, personally and on behalf of Eight of Swords, LLC.

Standing could have presented an interesting problem, sidestepped by the TTAB. The opposition was filed in the names of DiCenso and the LLC. According to the opposition (footnote 1), “DiCenso is currently involved in bringing a derivative action in the Supreme Court of the State of New York, Kings County. Because that particular form of pleading is is not available in the Trademark Trial and Appeal Board, we are filing this opposition on behalf of DiCenso and Eight of Swords to approximate a derivative filing.” The Board found that because DiCenso was a co-founder with at least a minimal ownership interest in, and is due revenue from, the LLC she is not a “mere intermeddler” and therefore has standing. Only one party needs to have standing, so the Board did not address the LLC’s standing.

As expected, Wallin claimed that he was the owner of the trademark and the LLC was his licensee. It would probably, though, be a good idea to have some evidence to support it:

[W]e view the activities of each party prior to the July 20, 2009 opening of the business as a typical collaboration between two individuals who jointly are starting a business, i.e., a partnership or joint venture: Wallin was to be primarily responsible for performing tattoo services, but DiCenso found and leased the rental property for the business, prepared the paperwork to formalize the legal entity, and loaned the business virtually all of the start-up capital, among other things. While DiCenso’s ownership interest is “minimal” and she is not authorized to manage the LLC’s current operations, the New York Supreme Court determined that her interest is more than 0%, and Wallin’s is less than 100%.

There is no evidentiary support for Wallin’s repeated assertions that he licensed the mark to the LLC or that he obtained sole ownership rights through any such purported license. Wallin testified that he never signed a license agreement with the LLC, and the record is devoid of any details concerning a purported oral license.

In addition, Wallin’s assertion that he “was the sole managing member and majority owner” of the LLC when he “determined that the LLC would license the Mark from Wallin” is contrary to evidence of record: DiCenso signed the LLC’s May 20, 2009 lease and the June 17, 2009 Certificate of Publication as a “Managing Member” of the LLC, and the January 13, 2011 Order from Judge Demarest, which proclaimed Wallin “the sole managing member” and majority owner of the LLC, is not retroactive to the May 20, 2009 formation of the LLC, and it does not mention a license of the mark by Wallin to the LLC.

So, “there simply is no evidence that Wallin individually owned the mark when he filed the application. The application therefore is void ab initio.”

Ms. Chestek is admitted to practice in Connecticut, the District of Columbia, Massachusetts, New York and North Carolina and is Board Certified by the North Carolina State Bar's Board of Legal Specialization in Trademark Law.

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